The United States Postal Service (USPS) ended its first quarter of the 2014 fiscal year (October 1 to December 31, 2013) with a net loss of US$354 million. The USPS has recorded 19 losses amid its last 21 quarterly reports.
USPS stated its losses continue to mount due to the decline of higher-margin first-class mail, stifling legal mandates, and its inflexible business and governance models.
“The Postal Service is doing its part within the bounds of law to right size the organization, and I am very proud of the achievements we have made to reduce costs while significantly growing our package business,” stated Postmaster General and CEO Patrick Donahoe. “We cannot return the organization to long-term financial stability without passage of comprehensive postal reform legislation.”
Without such legislative change, USPS expects to default on another required US$5.7 billion retiree health benefits prefunding payment due by September 30, 2014, because it will have insufficient cash and no ability to borrow additional funds at that date.
In the event that circumstances leave the Postal Service with insufficient cash, the Postal Service would be required to implement contingency plans to ensure that all mail deliveries continue. These measures could require the Postal Service to prioritize payments to its employees and suppliers ahead of some payments to the federal government, as has been done in the past.
“We grew revenue by over $300 million through aggressive marketing and improving service, and we reduced operating costs by $574 million in Quarter 1, partially due to the separation of approximately 22,800 employees in 2013 under a Voluntary Early Retirement program and improved efficiency in our workforce,” stated Joseph Corbett, CFO and Executive VP, USPS.
In its 2014 first quarter, the USPS had mail volume of 42 billion pieces compared to 43.5 billion pieces in the corresponding 2013 quarter. First-Class Mail volume declined 4.6 percent; Standard Mail volume declined by 2.8 percent; and Shipping and Package volume increased 10.3 percent.